The National Retail Federation urged Congress to address an increasing threat to retailers: patent trolls.
Patent trolls are shadowy entities that purchase overly-broad patents with the sole intent of suing retailers and other end-users of technology that allegedly infringe on those patents.
“Trolls’ claims not only affect e-commerce applications and the everyday use of technology, but also the storefront operations of traditional brick and mortar retailers,” NRF Senior Vice President David French said. “Some real world examples cover point of sale and inventory control equipment, including; scanning barcodes, printing receipts, the sale of gift cards, and the connection of a computer or printer to an Ethernet network.”
French’s comments came in a statement submitted to the House Energy and Commerce Subcommittee, which is examining patent trolls’ use of intentionally-vague demand letters - the initial letters legitimate businesses receive accusing them of patent infringement. NRF described how patent trolls are abusing the patent and legal systems, hampering technological innovation, crowding the courts, inhibiting job creation, and driving up costs for retailers and consumers alike.
“Trolls target retailers because they are more numerous than manufacturers and suppliers, and therefore are more profitable to the trolls,” French said. “Trolls also know that retailers have less technological expertise to defend the allegedly infringing products and operate on thin profit margins and do not have the resources to fight back.”
Retailers often settle trolls’ claims rather than challenge them in court due to the fact that the average case takes about 18 months and costs roughly $2 million to adjudicate. In response to the growing patent troll problem, which costs the economy $30 billion a year, NRF supports legislative and regulatory proposals aimed at requiring greater transparency and specificity from the trolls, and stopping the trolls’ abusive and costly behavior before the suit ever reaches a court.
French said NRF supports legislative proposals to have the Federal Trade Commission look into patent troll demand letters under its current authority to investigate unfair and deceptive trade practices.
NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans.
Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s This is Retail campaign highlights the industry’s opportunities for life-long careers, how retailers strengthen communities, and the critical role that retail plays in driving innovation.